Amendment to the Thai Civil and Commercial Code: mergers as new alternatives to M&A transactions in Thailand

Thursday 31 March 2022

Nuanporn Wechsuwanarux

Chandler MHM, Bangkok


Kornkitti Sivamoke

Chandler MHM, Bangkok


Sirawan Fuengfoosin

Chandler MHM, Bangkok


Unlike many jurisdictions, mergers are not recognised as one of the tools for M&A transactions under the current Thai Civil and Commercial Code (CCC). Currently, the CCC only permits amalgamation, which is a consolidation of two or more companies where all amalgamating companies will be dissolved and a completely new entity will be established.

To increase Thailand’s attractiveness for M&A transactions, Thailand is in the process of passing a bill to amend the CCC to include merger schemes as an option for M&A transactions (CCC Amendment Bill). This bill has been passed by the House of Representatives and is being reviewed by the senate.

The difference between mergers and amalgamations under the CCC Amendment Bill

Under the CCC Amendment Bill, there is no difference between the legal requirements and processes for mergers and amalgamations. The key requirements are:

  • obtaining a special resolution from the general meeting of shareholders; and
  • notifying the merger/amalgamation to all of the merging/amalgamating companies’ creditors within 14 days of passing the special resolution to merge/amalgamate.

Upon the merger/amalgamation, all rights, obligations, and duties from the merged/amalgamated companies will be automatically transferred by operation of law to the remaining company or the new company (as the case may be).

An alternative strategy in Thailand for M&A transactions

As mergers are not legally recognised, a company that wishes to merge its business with another company and wishes to be the surviving entity after completion of the transaction has to adopt a business transfer scheme. The target company can then transfer its entire business to the acquiring company, resulting in a similar result as a merger. If the CCC Amendment Bill is passed, mergers will be recognised by law and will become an alternative scheme for M&A transactions in Thailand.

One significant impact on M&A transactions would be in relation to the transfers of licences. Under business transfer schemes, closing can be difficult as some operating licences may not be transferable, or may require lengthy and complicated processes to complete. The automatic transfer of rights, obligations, and duties by operation of merger law under the CCC Amendment Bill would hasten the process of licence transfers: the licences of the remaining company would be unaffected by the merger, while the remaining company would need to apply to change the licence holder’s name for the absorbed entity’s licences. While some government authorities may still require the absorbing entity to reapply for a licence or submit an application for the transfer of a licence, the recognition of mergers under the CCC would still make the overall transfer process much easier.

Another noteworthy issue is the difference between the tax implications of a merger and a business transfer scheme. It remains unclear what the actual tax implications of a merger would be. However, considering the similarity between a merger and amalgamation, we assume that the tax implications of merger will be very similar to an amalgamation, if not the same.

Subject to compliance with the relevant tax regulations, a business transfer that meets the Entire Business Transfer (EBT) scheme criteria and an amalgamation enjoy similar tax exemptions – eg exemption from relevant corporate income tax, personal income tax, special business tax and stamp duty. For a transfer of land, the EBT scheme is subject to 2 per cent of the appraised price as a land transfer fee, while amalgamation is only subject to a nominal THB 50 fee for the change of the owner’s name. Therefore, the introduction of mergers under the law would also provide a better alternative for tax planning than the EBT scheme.

The timeline and enactment of the CCC Amendment Bill, or whether it will even be enacted, remains unclear. Moreover, other relevant law – eg, tax, specific laws for certain business operations and so on – have not yet included mergers in their provisions since the CCC Amendment Bill has not yet been passed. Therefore, the overall process for the legal introduction of mergers in Thailand will require some time.


As Thailand begins to amend the CCC to legally recognise mergers as a form of M&A transaction, the Thai M&A market could potentially change significantly. The introduction of mergers as another avenue for M&A transactions is expected to be a positive change once recognised by the law. Upon availability of the scheme, we expect to see significant growth in merger transactions, especially in group companies carrying out cross-border restructuring.